christopherskinner4136 – Christopher Skinner

March 20, 2024March 20, 2024

How Top Companies Are Using Language Psychology To Recruit Ace Teams

Why do some companies enjoy accelerated and sustained growth in defiance of supply-chain glitches, rising inflation and political disruption? Are they just lucky?

After analyzing 30,000 businesses and millions of leaders over a 15-year period, business model expert Christopher Skinner believes he has the answer. It doesn’t involve capital, a stellar business plan or genius marketing.

“It’s because of who they hire,” he says.

In analyzing businesses and their employees, Skinner pondered how the most successful companies recruited ace teams with members akin to the “PayPal Mafia,” a dozen-plus entrepreneurs (Elon Musk, Reid Hoffman and Peter Thiel, among others) who once worked at PayPal and later launched major companies.

“It turns out that it’s not random,” says Skinner, founder and managing partner of New Orleans-based Stealth Dog Labs, which builds organizations using disruptive innovation technologies. “It takes purpose,” he says.

Analyzing Language Data to Identify Personality Types

But how does a company identify and then hire “good people?”

When Skinner started his career, he knew he needed a methodology, one that uses the psychology of language to determine individual and team mindsets. By studying vast amounts of speech and text found online, it would be possible to identify archetypal personality types and, indeed, the personalities of entire organizations.

Opportunists, for example, are known to excel at sales, and results-driven individuals can make superb leaders. By contrast, some personalities—self-saboteurs, narcissists and martyrs—can become company tripwires.

The problem he faced, however, was how to gather and then evaluate millions of words and phrases—language puzzle pieces that he could assemble into portraits of personality types.

“I built a crawler,” Skinner says.

Specifically, Skinner, a designer and builder of search-engine algorithms, built his first psychology-focused search engine in 2010. “Really, no different than what Google does,” he says. “It just collects words.”

Skinner has become one of the few people to study language density at scale, his work utilized by Google, Vodafone, Bose, Target, Oreck, United Airlines and SpiderOak cybersecurity, among others. When studying such data, he identifies words and phrases that organizations and individuals frequently repeat, removing personal factors. He then categorizes the findings into basic personality types.

For example, results-driven mindsets favor such words as “complete,” “obtain” and “secure,” as well as future-tense words. Such types quickly get to the point, are highly outcome oriented and are not distracted. “It’s the right role for leadership,” Skinner says.

Sales whiz opportunists use hedge words such as “because,” “therefore,” “if” and “then.” Skinner notes that analyzing language usage is a nuanced art, so his findings might not be obvious to others.

“I didn’t invent language psychology,” says Skinner, who has a degree in abstract mathematics along with three tech automation patents. “But over the last hundred years, psychologists have learned that if you use too many of certain words, it means something.”

Qualities of Successful Leaders

Successful leaders are usually results-driven, but they’re also system thinkers, a mindset that values relationships and varied interactions among teams and networks. Examples of system thinkers are Jamie Dimon; Steve Jobs; Whitney Wolfe Herd, co-founder and now chairman of the online dating platform Bumble; and author Reshma Saujani who founded Girls Who Code, which aims to close the tech gender gap.

“Systems thinkers can float and comprehend very ambiguous things,” Skinner says. “A person at that level combines things and sees how they relate, a process that doesn’t normally make sense to most of us. If you have enough of that, and blend it with results-oriented thinking that targets outcomes, it’s going to be very profitable for everybody. These are win-win types. They figure out how to make it all work.”

Skinner, who has ingested a wealth of language data, sometimes observes similarities between individuals. He notes that FTX cryptocurrency exchange founder Sam Bankman-Fried and biotech blood-testing entrepreneur Elizabeth Holmes, both convicted of fraud, share similar language density patterns.

The pair, and others like them (“the list is quite long,” Skinner says), use fewer emotional words and have an “increased use of cognitive processing words like ‘think,’” he says. They also tend to use the words “possibly” and “navigate.”

Skinner has used various methods of assessing personality, including the Myers-Briggs Type Indicator and the Five Factor model, commonly called the Big Five, but he prefers the work of William R. Torbert. “Torbert describes people very simply,” he says. “Once you learn Torbert’s concepts about mindset, you have a very good idea of what kind of person you’re talking to.”

Skinner advises employers to give personality tests to potential hires, adhering to laws that prevent violation of privacy.

Every Company Has a People Operating System

A company’s “people operating system” is ultimately what determines continuing success, Skinner says. He arrived at the phrase after observing the ecosystem of employees, vendors and customers that surround companies. “All these people should be working toward a common purpose, all of them more or less in sync,” he says.

Skinner offers the example of AutoZone, which sells automotive replacement parts. The company has nimbly adapted to changing markets and technologies over its 45-year history. In 1999, it made its debut on the Fortune 500 list, and in 2021, Forbes ranked it No. 39 out of 750 multinational companies and institutions on its World’s Best Employers list. AutoZone has more than 7,000 stores in the U.S. and other countries.

“I don’t doubt that the CEO and who he’s surrounded himself with are exceptional,” Skinner says. “He’s got an operating system that’s spot on.”

Linking Personality Types to Selling Luxury Real Estate

Filling the right slots with the right people is the optimal way to develop such an operating system. Sales-minded opportunists, for example, excel at making things happen. “They find a way to win,” Skinner says. “And they’re very good at emergencies. But that’s a very self-oriented position. Their purpose, and really their subconscious purpose is, frankly, themselves.” They do best when sticking with sales.

Placing personality types in the wrong position can create friction, both within the individual and the company. Opportunists, for example, might be good at selling conventional real estate, but not brokering elite deals. “They’re not going to survive long. Do they exist? Yes, they’re out there. But are they closing the volume of deals they could if they would just think a bit more customer-centric?”

In luxury real estate, the customer often has infinite choices, “and if a potential buyer doesn’t feel like they have a team player, they’re going to walk,” Skinner adds. Rather, top-tier brokers are often system thinkers who are results-driven. Empathy also helps in understanding affluent, multifaceted mindsets.

Much like the “PayPal Mafia,” “once you get that team right, then it takes off,” Skinner says. “PayPal was a force precisely because of that team. They didn’t join forces haphazardly; it was with a purpose. Before PayPal, you went to your bank. They created an industry.”

Results-Driven Leaders Drive a Company’s Success

Companies that lose too many results-driven leaders usually suffer. After the 2008 subprime mortgage crisis, JPMorgan Chase Bank struggled. “If you look at the top 1,000 leaders in the company, they lost a disproportionate number of results-driven leaders,” Skinner says. “It was just a bad time to be in the banking business, and they were paying for that.”

Around 2013, Chase, the largest bank in the United States, “started hiring results-driven leaders again and it’s paid off,” Skinner says.

Skinner considers Chase’s CEO and chairman Jamie Dimon to be “one of the highest results-driven system thinkers running a company today. I’ve analyzed his text for two decades (speeches and other communication). His mental capacity has matured. He’s as skilled as Jeff Bezos. He’s in a rare, rare club, and he no doubt surrounds himself with capable people.”

Other companies don’t bounce back like Chase did. Skinner cites Unisys, a global technology solutions company. “Unisys’ stock has declined over the past 20 years,” he says. “But what’s interesting is, almost every year they do a little worse. And they’re not alone. When you look at how they think, how they use language, it’s not results-driven. They tend to be a great group of experts who are highly disciplined. But they’re not solving customers’ problems.”

Disciplined experts often resist change, have limited flexibility and are slow decision makers, according to Skinner. Some businesses do fine with disciplined experts, he adds, because they’re not driven to innovate.

“But I don’t know many businesses that are not on pins and needles over the next 10 years,” Skinner says. “If you feel that decisions are not being made fast enough, and the company is suffering from limited flexibility and resistance to change, then bringing in results-driven systems thinkers could be an answer.”

May 12, 2022

Opportunity Thinking vs Results Thinking

A look at a select few companies and a comparison of Opportunity mindset vs Results driven mindset of leadership teams. Jamie Dimon is a classic example of Results driven mindset. Larry Ellison is a classic example of Opportunity driven mindset. Both leaders have a leading edge of systems thinking. They seek answers to the same questions in very different ways. No one person is 100% of any one mindset but clusters and patterns do exist. We all have dozens if not hundreds of traits and states that prioritize how we solve questions. Each company hires and promotes certain mindset types different than competitors and industry. When companies get this right, they promote and hire mindsets in consistent ways while preserving diversity and complimentary thinking.

May 12, 2022May 12, 2022

Disciplined vs Systematic

Disciplined vs Systematic mindset of leaders in a select list of companies. A sample of 22,500+ leaders (titles include Director, President and/or Chief). No wrong or right answer. Each company needs different mindsets to operate in the environment they are in. Too much can serious impact performance. For example, too much variation in Signal to Noise ratio in hiring often drives lower PE Ratios for publicly traded companies. For example: Companies with too much Systems thinking might not settle down fast enough to productize, opening the,selves to disruptive innovation. Focusing on mindset first, allows companies to plan complimentary thinking and more diversity in multiple ways.

April 18, 2022

CXO priorities?

Things always change. It’s always been that way. The 1st telegraph was likely more shocking to people than anything Elon says today. Today’s environment seems to be more conceptual in ways. How does today’s news impact your brand, hiring and selling your products? Here are a few top issues I found from reviewing many different surveys, whitepapers and thought leaders.

From the early 80s to recent years, our economy has been rewards based and efficiency focused. Just look at PE ratios. Going forward you need leadership that can think at a higher level. Holistic and systems thinkers can solve complex problems better than efficiency and diplomatic mindsets. I have been researching organizations that perform well and invest in their futures, while maintaining good to great financial metrics. The mindset of leading organizations look very different from efficient based organizations.

Sustainable and regenerative operations.

People who are adaptable can change. Adaptable people are not the right match for efficiency and diplomatic roles. Finding, promoting and placing the right people in the right seats has always been a major topic. In the age of conscious consumption and conscious organizations, adapting products and services will be a requirement. Leaders who are not conscious and empathetic to the customer and employee will not be able to make the change rapid enough. That means finding, promoting and hiring in different ways. The old functional methods don’t work for the companies with high PE ratios of tomorrow.

It’s odd that we collectively call it ‘conscious’ consumption and ‘conscious’ organizations. All organizations have unconscious and subconscious mindsets that ultimately define their futures. I have found a number of organizations selling virtually the same product in the same industry. After auditing hundreds of these organizations, the leadership mindset differences are pronounced. Some are conscious and highly likely to have higher financial performance metrics. There are many who are very efficient with their investments and rigorous by design. I would like to say organizations with a higher number of systems thinkers and holistic thinkers are able to solve many of the problems that keep showing up in the 2022 reports that I have been reading.

Here’s one example of a topic that keeps coming up. Intelligent machines are more sophisticated today. Outsourcing to this new world requires leaders who understand conceptual systems that can’t be well defined. Some questions I ran across: Is AI working? Do you have people who can tell the difference? What roles should machines take? Automation is a great answer for many roles but not all of them. Which ones? Do you have leadership in place that can plan for the difference, the change over time?

It all comes back to people. After examining hundreds of leadership teams, the companies that are doing well and will do well in the future have the mindsets that can change. Those same organizations adapt as needed, when needed.

I have a ton of data to share and will start doing so soon.

January 26, 2021

Why PMF is the secret superweapon of the 2020s?

By Akos Tolnai and Christopher Skinner

Go to market strategy was a stronghold, captained by marketing. The more you could spend on marketing or, in general, customer acquisition, the steeper the growth curve would be.

Or to put it this way: even a mediocre product could become a success with substantial marketing spending.

The last decade has changed this status quo.

Perhaps that change began with the controversial introduction of Samsung’s first smartwatch, Gear, in 2013. Samsung’s marketing budget was one of the biggest by that time, both in terms of total amount as well as proportionately compared to revenue.

But Gear didn’t perform well. Samsung claimed to have sold 800 000 units, with local sources raising doubts about the validity of this number. Moreover, quality may have also been compromised: according to reports, Best Buy experienced a previously unheard of 30% return rate. More details on this in the Gear Wikipedia article.

And this particular story isn’t unique at all in the last decade. Or defining “decade” more precisely: the period between Lehman Brothers and Covid. Flops galore, they all boil down to product-market fit and the results of poor product-market fit. How? Why?

We think two dynamics are to blame for these flops—changes in customer behavior and general business constraints.

Rise of Moment of Truth
CAC rising

Moment of Truth

There are only two types of products (or services) in the world—those with the “moment of truth” ‘halo’ and those without this halo.

What is Moment of Truth?

Marketing communication is about hitting the right target market and customers with the right message. It is usually not an impossible task for seasoned marketers, even though their work is more complex and costly than before. In a business with a moment of truth the marketing message is validated. When you buy something, you definitely realize the marketing promises or hype is true or not. You decide for yourself. The marketing lingo (a.k.a. Marketing bullshit) gets tested against the product’s reality.

The promise of “Great battery life,” or is it not? Great performance with all-day battery life, when in reality, you maybe get to noon? You either return the product or start complaining about it on social media, in Amazon reviews, or to friends. The problem is exacerbated for services. Superfast internet? Best in class customer service? 99.5% uptime? Or are you “re-accommodating the customers”? Good for you. You are now entrenched in customer experience training around the world.

Understanding the importance of ‘moment of truth’ and customer experience cannot be overstated.

Customer Acquisition Costs

Is digital advertising becoming cheaper?

At least that is the mantra you hear every day. You can start advertising with a $100/day budget. Customer acquisition cost is declining, right? Most likely not. Much of this problem has to do with attention of the user. The price of one single ad might become lower, but to have a focused eyeball, a “committed” eyeball, is significantly higher. Not to mention you have to add the price of the noise, the cost of bad reviews, timing cost, etc. The price of a click is dependent on the cost one is willing to pay. And if one of the players has an endless bag of cash, you are outperformed.

The PMF-CAC (Spending) Quadrant.

We tried to summarize what was and what is in the following chart:

Low PMF – High budget

Twenty years ago, you could market your product with mediocre Product-Market Fit and a huge marketing budget and do well. A proponent of this approach was Microsoft, who could keep pouring immense amounts of money on marketing until they educated the market, and the product reached a natural growth trajectory.

Today this will result in instant failure, at least when calculating the ROI. Innovators, startups, or companies with capped marketing budgets will falter if they end up in this part of the chart.

Low PMF- Low budget

You might get lucky, and your product finds a second life. The initial value proposition failed, but someone, most likely an influencer, will pick up your product, use it for something else, and make it chic, building hype around your product. You will get a substantial return, but growth will have a glass ceiling.

High PMF – High budget

In this quadrant are the companies who have found their niches and have the budget to “out-advertise” everyone. They pour endless amounts of money into customer acquisition, regardless of channel (partner network, advertising, retail, salesforce). You are on track, and all you need to do is put the pedal to the metal. You know the metrics, and you know the algorithm that will result in the best effects possible—the road to world domination.

High PMF – Low budget – The dark horse

You know more about your channels and customers than your results predict. You didn’t have the pressure to grow before coming to terms with your Product-Market Fit. You focused on customer psychology, buying behaviors, and persistently created the feedback loop to make a better product or service based on target niche feedback. You grow niche-by-niche, as exemplified by Geoffrey Moore’s Bowling Alley strategy. From here, world domination is just a sizeable marketing budget away. It’s the often told dream that is rarely seen. We read about these stories, but most likely, you don’t see these examples in your world.

The path to success

If you look at current startups and innovators, the path is usually as follows;

Low PMF – low budget – investor comes in, and it’s now called “Investor-Promise Fit”
Low PMF – high budget – Death Valley trip, aggressive growth stage; high and growing CAC
High PMF – high budget – aggressive growth stage, lower CAC

Instead of the above, you could opt for an under-the-radar strategy, in a more resilient, more grinding, and focused way of finding high PMF first and moving with or without external funding to high PMF – high budget phase. It is the “way of the cockroach,” the new startup kung-fu, where the higher PMF is essential to remain profitable.

Understandably, VCs have a problem understanding this as well. Coming from the first 20 years of the internet age, if you had money, you could eventually get to PMF. In 2020, having money to get to PMF means having LOADS OF MONEY, which most companies cannot afford.

Any innovative product has a limited time to show its viability. And in this limited time, customer acquisition becomes extremely important. How do you acquire customers? What should the growth trajectory be, given the above problems? We believe making

Product-Market Fit a priority at the executive level has come. It will be the most important topic discussed in boardrooms, innovation centers, and VC meetings. We believe the first ones focusing on true PMF will emerge as superstars of the next 10-20 years.

Still to come:

How to get to PMF using psychometrics and customer experience.

January 11, 2021

Customer desire versus viability and feasibility of your organization

This is a brief article describing customer desire vs viability and feasibility. Customer desires, they’re unmet needs can be described as somewhere between low and high and shown on the above y axis.

The ability of your organization to build a viable and feasible product can be seen as either low or high on the x-axis. A lot of times organizations struggle to be viable and feasible. The product is just not that easy or intuitive. In my head this X-Axis alone can be described as a 1/x curve. Far too many products are just not that well done. The organization envisions itself as the use case and builds something it understands. Few products get to that rare 1 or 2 deviations from the norm. Sometimes It can be capital constraints or resources lacking some sort (My own experience has been to find organizations lacking in this area more than the culture issues first described). Meeting high customer desire with the products they expect and can use puts you into a magic quadrant. It’s rare. When thinking about your products, how can you create more desire and how do you get the organization to produce at a higher level? Get into that special place and you’ve created a recipe for an organization that will be difficult to disrupt.

Recently, I ran into a company that was producing a consumer product. They had no interest in solving greater customer desire nor were they interested in integrating other technologies to make that product more defensible to competitors. It’s a rather sad story because they remain in one of the other three quadrants that’s uninteresting. They don’t have a capital constraint; they have an education constraint around understanding the customer.

Understanding how to create increased customer desire can be solved through customer psychology and tapping into understanding the unconscious needs of people, whether it’s B2B or B2C. By unraveling desire, you find products and services that are overdue for the market – there is no shortage of needs that can be solved profitably. Now you’re on to the task of creating viability and feasibility. I believe we have to challenge ourselves to stretch these two things and get into that special quadrant.

January 3, 2021January 11, 2021

Ability versus motivation of the customer

I have been thinking about customers in terms of their motivation. You can connect that concept to their personality traits. One person’s personality might look at a ‘job to be done’ as very hard to accomplish while another sees the ‘job to be done’ as easy. Maybe, an example is building a deck at your house. The motivation might be very high to build the deck but for some personality types the ability might be very hard. The execution of the job to be done is a) DIY, b) hire someone or c) dream a bit more. Maybe item c) is the job for many? I’m not just talking about hammering nails and operating saws. What I mean is the personality trait of say, anxiety, dealing with lumber and saws might be too much to deal with. The subconscious mind says those things can injure you or your hands and the risk (another trait) says don’t try.

When the motivation is high in the ability of the customer to accomplish the job to be done is relatively easy, you’re selling products. Any time you’re thinking about selling something you have to frame what is the subconscious motivation of the customer which can be dialed back to their personality traits. The ability of the customer is also related to their personality traits. It’s not so much physical ability or mental ability but sometimes traits get in the way or they become an enabler to get something done. Traits are causal to purchase decisions and most often, like 80%+, they are subconscious or unconscious in nature. They are the reasons why we buy.

December 30, 2020January 2, 2021

Pathways to growth: you have a few choices

When you look at the pathways to building new capabilities, solving product-market fit, jobs-to-be-done and ultimately growing your business, there are a few different pathways.

Often the pathway of the leader is to First create efficiencies, explore and discover new ideas and eventually build new capabilities. This is traditionally the much longer path taking anywhere from 3 upwards of ten years to deliver on the promise. It’s deliberate and it’s efficient. At the end of the day you get to efficiencies that are valuable and solve customer needs. You also build an incredible market and own a lot of market share. This works quite well as long as a disrupter does not emerge as an employee the concepts of disruptive innovation.

Disruptive innovation did not emerge, one could argue, in the smartphone market. The leaders created efficiencies, discovered and explored, and built in those new capabilities over a long time period. This incremental methodology requires data sources that are reliable and sound.

Emerging companies disrupt the existing entities primarily through time-to-market. If they took just as long as the incumbent, it would not be disruptive. Take for example Parrot, the company that built the first drone for the consumer market. They had a great idea but their time to innovate was so slow and so costly that an emergent competitor easily wiped them out of the consumer marketplace. Even though they were creative, they were not disruptive. How odd.

Disruptors tend to find data in non-traditional ways. Having built a few disruptive companies, you had no choice but to look for non-traditional ways to build and sell products. By finding data sources that are empowering, you could quickly satisfy why people buy and speed product to market at a never faster clip.

None of this changes because of a pandemic. Needs might change but personalities and traits don’t. Products may change but the fundamental reasons why we buy don’t change. Companies that focus on efficiencies during a time when data reliability is low extend the time it takes to create those efficiencies. Cutting back is not efficiency, it’s reduction of capabilities.

As companies explore and discover new products and markets whether it be existing customers, adjacent or new customers must employ better sources of non-traditional data to build capabilities faster.

Some basic check list items:

Are you focused on efficiencies?

So much so, that you might be open to disruption?

How much effort are you doing to explore and discover adjacent and new markets?

How long does it take you to build in new capabilities and start selling to new customers who will take chances on your new products?

Have you found non-traditional data sources that predict why people buy?

Are you willing to change the business model?

These are just a few questions that you should ask yourself as you embrace change. There are many more and there’s a sequential order of where to start first. As always, I welcome questions and comments. I love looking at business models and welcome your questions.

December 28, 2020December 29, 2020

Pick the right key metrics and go faster, better, and cheaper.

There’s a lot of talk about how to measure your business especially if you’re pursuing product-market fit. You might be a startup or a company trying to (re)build a product. But how do you know if you’re heading in the right direction?

Where to start when it comes to measuring?

Of course, you’re going to measure something but what? If you don’t know a lot about your customer, you’re likely going to start with Activation, go through some learning cycles to see if retention is created and end up in Acquisition. That is ideal. The downside is you’re learning about your customer because of the process and it’s going to cost you a lot of time.

If you know a lot about your customer and the deep reasons why they make decisions (which is what we do at Stealth Dog Labs), you’re going to move through the stages as described above quickly And you’re not going to rely on a time-eating process to learn about your customer.

Regardless of what you know about the customer, the best place to start is activation.

Can you make a mistake by prioritizing the wrong stage at the wrong time?

Having five key areas to measure does make a lot of sense. Unfortunately, prioritizing the wrong things at the wrong time makes a real mess.

Most businesses immediately think of revenue and referral via the Acquisition stage. Why not, it’s totally logical.

You can jump into acquisition right away if you understand the deep reasons why people buy. It’s very unlikely you can pull this off. What you don’t want to do is start here especially if it’s going to cost media dollars and partnerships (media and Partnerships is somewhat of the same thing. Waste it and you’re going to get the same results).

I’m going to argue that the revenue stage will come to a lot faster if you pay attention to the underserved needs of your future customers. By understanding people thoroughly you will speed up the Activation stage. In fact, you’re going to speed up all stages. defining the underserved needs of customers is foundational to product-market fit. Measuring the underserved needs is something that’s been sadly missing.

That’s the premise of what I built at Stealth Dog Labs. The goal is to speed up the steps in the process that drives the steps by quantifying underserved needs.

How activation and retention can get messed up also

While revenue is the most important thing in the room, activation and retention are critical. Here’s where things go wrong. If you’re trying to send the wrong people into the activation and retention channel and struggling, it’s because you have not truly solved the underserved needs of the customer. They should get you out of the gate and activation should flow well if you can quantify why people make decisions about your product.

Making things better faster and cheaper

By nailing these down via deep understanding of why people decide makes growth go a lot faster, With far less garbage in the system.

Some rules to follow:

Start in the activation stage and make sure you understand and have quantified the underserved needs of customers for each product.
Don’t start in the acquisition stage unless for some reason you have a miracle understanding of why people are going to buy your product.
Don’t rely on anything to do with media metrics. The job of media is to sell media. They are not about to sell the cream-of-the-crop to you. If you get one good lead out of 100 clicks, congratulations
Avoid averaging. Mixing good things and bad things together is averaging too much of a diverse set of experiences. You’re not going to learn much. It’s too hard to decipher the intention of people you’re not meeting or even to get inside of their heads. You have to quantify and it’s a very different way.
Build predictions that you can measure.
Activation and retention go hand-in-hand and quantifying the underserved needs of future customers you will move into the acquisition stage quickly.
Once you were data-driven about acquisition revenue and referral come along for the ride.

Guessing is just not cool. Avoid it and things get much more interesting and positive. One more thing, Don’t sell people junk. Build a product people care about that they need.

December 26, 2020December 29, 2020

Product-Market Fit and the use of data

Businesses, people and markets are always changing. As I read today, AirBnB has some struggles. What will they do to compensate for loss of revenue in late 2020? Do they just keep cutting costs or do they try to create a new business model? At this point, there’s no quick fixes. Only efficiencies. Where are the Innovations?

If you frame the question this way, it gives you some ideas about what kind of data you will need to accomplish your goals. If you’re selling to your existing customer base, and you’re selling the existing product, you have more than enough data and you can use typical means and methods to create efficiencies. No use employing expensive emergent strategy or innovation. I recently ran into a company that claims 15 customers make up 90% of their sales. Things have been static for years. That particular company fits into this category.

At the other extreme would be approaching completely new customers with a completely new product. There is no means to create efficiencies nor does data exist. In this case you have to use a hypothesis about the future and what are the unmet needs of customers. You need to employ concepts like jobs-to-be-done and customer psychology to figure out what to do next.

If you focus on the extreme cases it leaves you susceptible to other problems and conditions. For example, if all you’re doing is emergent strategy then are you paying attention to the existing products and existing customers? Likewise, if you’re focused on existing customers and selling them existing products and all you’re thinking about is efficiencies, you will be disrupted from an emergent organization that attacks you from the bottom. Classic disruptive innovation problems.

I ran into a company that was hacked and all of their trade secrets were involuntarily open sourced. All of their advantages were taken away in less than a minute. As a result, sales have declined by 50% in less than 1 year. They are now disrupted because they don’t have a defensible technology core – It was stolen. What do you do? Well for one thing focusing on creating efficiencies is not the answer. You will just get hacked again and those efficiencies will be taken away from you – again. In that situation you’re forced to look for Innovation; probably adjacent customers and selling incremental improvements to existing products.

It’s a tough world out there but if you don’t know how to frame the world you are in, it looks even harder than it really is. If you need help defining the product market value position and how data impacts your company and where to innovate and how much, I’m always happy to discuss business models.